Stock Categorized as Trading Securities Is Purchased for $52,000

question 40

Multiple Choice

Stock categorized as trading securities is purchased for $52,000.At year end,when the market value of the stock is $61,000,the adjusting entry that would be recorded is:

• A)Allowance to Adjust Short-Term Investments to Market 9,000 Unrealized Gain on Short-Term Investments 9,000
• B)Unrealized Loss on Short-Term Investments 9,000 Allowance to Adjust Short-Term Investments to Market 9,000
• C)Allowance to Adjust Short-Term Investments to Market 9,000 Short-Term Investments 9,000
• D)Realized Gain on Investments 9,000 Short-Term Investments 9,000

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuing company, which does not necessarily reflect market value.

Contract Rate

Contract rate is the predetermined price agreed upon in a contract for services or goods, typically over a fixed period.

Annual Rate

The Annual Rate is the interest rate or growth rate for a year, often used in financial contexts to depict investments or loans.

Semiannual Rate

A rate of interest or growth that is calculated or applied twice per year.